Maximum 401k & Roth IRA Contribution Limits 2011

retirement jar moneyAs you probably already know, saving for retirement is extremely important, and there are many different types of retirement accounts that you can use including the individual 401k, Roth IRA, Traditional IRA, and Roth 401k. Which one you go with depends on your own unique needs and preferences, so be sure to do some research on Roth IRA vs 401k and Roth 401k.

Most of these are very easy to fund and maintain. But are you actually doing it? If not, what’s keeping you from getting the most out of these accounts?

Every year, the IRS reviews and adjusts the maximum contribution limits for retirement accounts. This year’s changes are minimal, but they’re still important for you to keep in mind.

Here are the 2011 contribution limits and rule changes on IRA and 401k retirement accounts:

IRA Accounts

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401k Accounts

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What Does This Mean For You?

If you are under 50 years of age, the most you can contribute to your Roth or Traditional IRA in 2011 is $5,000. If you are over 50, this bumps up to $6,000 in case you need to make up for previous years. Ask yourself, “how much money do I need to retire?” and adjust your contributions accordingly. Keep in mind that there is an income ceiling in place for both Traditional and Roth IRAs that may prevent you from participation.

Unlike IRA’s, most people tend not to max out their 401k accounts. Many employers have their own restrictions on 401k’s, but as far as the IRS is concerned, $16,500 is the max-out limit. Perhaps more importantly, this limit does not include what your employer contributes to your account. To find out limitations and program specifics on your plan, contact the program administrator.

Why Are There Limits on Contributions?

Studying the limits and constraints for these accounts made me wonder why a limit would be imposed at all. Taxes provide the only logical explanation I have seen anywhere. In the unlikely scenario that most people decide to put a large percentage of their earnings into a retirement account, the government loses millions in tax dollars. Granted, they get the money eventually, but if enough of us were to do this, the taxes that the government relies on in the short-term would be put on hold for years or decades. If you ask me, this phenomenon is about as likely as me walking on my hands for 24 hours straight, but I suppose “better safe than sorry” applies.

Final Word

Little has changed over the last three years concerning contribution limits on retirement accounts. At one point in 2010, there was talk of these limits being lowered, due to the largest drop in consumer price index in recent memory. Luckily, these levels remain constant for the time being, and we can continue to load up for the future.

How much are you contributing to your 401k and IRA retirement accounts? Are you maximizing your contributions and hitting the limits every year?

  • Ken

    Yes, I max out both my 401(k) and Roth. I have only been maxing out the 401(k) for a couple years now. In my first 12 yrs at my employer, we were restricted far below the IRS limits but due to M&A activity, the newest plan allows us to contribute the max.

    The way I see it, there should be encouragement from the gov for people to contribute whatever they can to self funded retirement plans. The more people are able to finance their own golden years, the less likely they will have to rely on Uncle Sam to support them. There should be NO limits on contributions.

    Also, when one begins to withdraw from the tex deferred plan, it’s all taxed at the income rate, not the (illegal) capital gains rate on the appreciation of the investments. So in theory, the gov will be getting more revenue on the backside as opposed to investments held in a taxable account.


    can i contribute the maximum 16.500 in my traditional 401k and the maximum 5000 in a roth ira at the same time?

  • kate land

    Can i contribute to a Roth, deduction the $6000 from my taxable income if I was not employed in 2011?